Eleventh circuit allows putative class action based on benefit-of-bargain rationale in case involving dietary supplements.
Plaintiffs asserted claims against IQ Formulations LLC and Europa Sports Products, Inc. under (i) Florida’s Deceptive and Unfair Trade Practices Act; (ii) Illinois Consumer Fraud and Deceptive Business Practices Act; (iii) New York General Business Law § 349, et. seq.; (iv) common law fraud, and (v) unjust enrichment. The dietary supplements in questions contain MethylPentane Citrate (“DMBA”). Plaintiffs alleged that DMBA was a new dietary ingredient prohibited under the FDCA. Defendants did not assert any of the exceptions under the FDCA; accordingly, the issue was whether purchasing a supplement banned under federal law constituted an injury in fact.
The Eleventh Circuit held that “[a] person experiences an economic injury when, as a result of a deceptive act or an unfair practice, he is deprived of the benefit of the bargain.” The court concluded that a supplement containing an adulterated substance had no value, and as such, the plaintiffs suffered an economic injury because they were deprived of the benefit of the bargain. The court reasoned that “some defects so fundamentally affect the intended use of a product as to render it valueless.” The court pointed out that the Seventh Circuit reached a similar conclusion in a 2011 case, ruling that a product that cannot be legally sold in the United States is not just diminished in value, but has no value at all. Based upon that rationale, the Eleventh Circuit held that plaintiffs had alleged facts sufficient to establish Article III standing to bring the claim.
Eleventh Circuit determines that standing of class members is relevant to certification.
Cordoba sued DIRECTV and its telemarketing vendor, Telecel Marketing Solutions, Inc. alleging he had received telemarketing calls on DIRECTV’s behalf in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227. Cordoba alleged that he received 18 calls despite his consistent demand that he not be contacted. He sought to represent “a class of all persons who received more than one telemarketing call from Telecel on behalf of DIRECTV while it failed to maintain an internal do-not-call list in violation of ... FCC regulations.” Telecel admitted that the company failed to maintain an internal do-not-call list as required by FCC regulation.
The trial court certified two classes of plaintiffs: (1) all individuals who received more than one telemarketing call on or after Oct. 27, 2011, when Telecel failed to maintain an internal do-not-call list in violation of 47 C.F.R. §§ 64.12000(d)(1)-(6); and (2) all individuals whose telephone numbers were on the National Do Not Call Registry who received calls from Telecel after Oct. 27, 2011. The second class of individuals were not part of the appeal, since their claims did not raise any issues with respect to class certification.
Reversing certification, the Eleventh Circuit held that, although the plaintiff had standing, the trial court had not addressed whether putative class members had standing. Individuals who received a telemarketing call but who had not requested that their names be placed on a do-not-call list did not have any apparent injury. “If many of the putative class members could not show that they suffered an injury fairly traceable to the defendant’s misconduct, then they would not be able to recover, and that is assuredly a relevant factor that a district court must consider when deciding whether to certify a class.” Because there was a real possibility that a large number, perhaps most individuals in the class, had not suffered any injury based on the defendant’s conduct, certification was not appropriate, and the court remanded for further proceedings consistent with its analysis.